National Vision Reports Double-Digit Sales, Earnings Increases in Second Quarter

DULUTH, Ga.—National Vision Holdings Inc. (NASDAQ: EYE) on Tuesday reported double-digit increases in sales, EBITDA and net income for its second quarter, which ended June 30. The company also opened 25 stores in the quarter and posted its 66th consecutive quarter of positive comparable-store sales growth. In its announcement, National Vision said its adjusted same-store sales increased 8.8 percent in the quarter, while net revenue rose 14.2 percent to $385.5 million from $337.5 million in the year-ago period.

“We are pleased with our second quarter and year-to-date results, which demonstrate the resiliency and consistency of our business model,” chief executive officer Reade Fahs said, noting that the streak of same-store sales increases began more than 16 years ago when a new management team took the helm of National Vision. The America’s Best segment of the company led the way in same-store sales, with a 10.2 percent increase in the recent quarter, while Eyeglass World achieved a 9.5 percent same-store increase, Fahs said on a conference call with securities analysts.

“We remain excited about the opportunities for the rest of 2018 and for years, and years to come,” he told the securities analysts at the conclusion of Tuesday’s conference call.

Among the Q2 highlights, according to the announcement, the company ended the quarter with 1,050 stores as overall store count grew 7.1 percent between July 1, 2017, and June 30, 2018. Comparable store sales (which rose 10.4 percent on a non-adjusted basis) “were primarily driven by increases in customer transactions and, to a lesser extent, average ticket,” the announcement noted.

In addition, National Vision said net revenue growth was positively impacted by approximately 100 basis points by the timing of unearned revenue. Adjusted net income increased 131.8 percent to $16.2 million, while adjusted EBITDA increased 18.2 percent to $46.8 million in the second quarter.

“Our team delivered its 66th consecutive quarter of positive comparable-store sales growth, driven primarily by customer transactions,” Fahs said. “We experienced an acceleration in customer traffic into the second quarter that benefited from an extended peak selling season. We opened 25 stores this quarter, and remain on track for our 2018 store-opening plans. … As we move into the second half of the year, we are reaffirming the 2018 financial targets that we established in March.”

On the conference call, Fahs was asked about the company’s relationship with Walmart (where it operates about 225 optical centers) and the possibility of expanding that relationship. “The Walmart relationship is strong and we’ve been Walmart’s partners for over 27 years now,” he said. “It’s a very good healthy relationship and we’re pleased to be able to partner with them. One of our key strategies is to strive to be the best partner that Walmart has ever had. No further news there.”

As a result of changes in California law, in the third quarter of 2017, the “Legacy” segment began providing eye examination services that previously had been provided by FirstSight Vision Services Inc., the company's HMO subsidiary, which increased legacy comparable-store sales growth by 195 basis points in the second quarter, according to the announcement.

Also, in the fourth quarter of 2017, FirstSight ceased the sale of vision care products in Walmart locations that were not operated by the company, reducing its net revenue and associated costs by approximately $1.8 million, with an immaterial impact on income from operations.